As a property owner, it is important to be aware of the various costs associated with owning commercial real estate. One of these costs is the business rates payable on empty commercial property. These rates can often be a significant financial burden for property owners, especially when their property is unoccupied. In this article, we will explore what rates payable on empty commercial property are, how they are calculated, and some tips for minimizing these costs.
What are rates payable on empty commercial property?
Business rates are a tax on non-residential properties in the UK, including offices, shops, warehouses, and factories. These rates are charged by local authorities and are used to fund local services such as schools, roads, and public transport. rates payable on empty commercial property are essentially the same as regular business rates, but they are charged at a different rate and with some exemptions.
How are rates payable on empty commercial property calculated?
The rates payable on empty commercial property are calculated based on the rateable value of the property. This value is determined by the Valuation Office Agency (VOA) and represents the annual rental value of the property. The actual rate payable is set by the government and is multiplied by the rateable value to determine the total cost.
For empty commercial properties, there are special rules that apply to the calculation of rates. Initially, the property is given a three-month exemption from rates after it becomes empty. After this period, the rates payable are reduced by 50% for the next three months. Beyond this six-month period, the property owner is required to pay the full rates on the property.
Tips for minimizing rates payable on empty commercial property
Given the potentially high costs associated with rates payable on empty commercial property, property owners may be looking for ways to minimize these costs. One option is to actively seek tenants for the property to avoid being subject to full rates. Finding a tenant not only reduces the financial burden of rates but also generates an income for the property owner.
Another option is to apply for certain exemptions or reliefs that may be available for empty commercial properties. For example, properties with a rateable value below a certain threshold may be eligible for small business rates relief. Additionally, properties undergoing major structural repairs or renovations may be eligible for an exemption from rates during this period.
Property owners may also consider appealing the rateable value of their property if they believe it has been overvalued by the VOA. A lower rateable value would result in lower rates payable on the property. However, it is important to note that this process can be time-consuming and may require professional assistance.
Finally, property owners should be aware of any changes in legislation or government policies that may impact rates payable on empty commercial property. Staying informed about these developments can help property owners anticipate changes in rates and plan accordingly.
In conclusion, rates payable on empty commercial property can be a significant financial burden for property owners. Understanding how these rates are calculated and exploring ways to minimize them can help property owners manage their costs more effectively. By actively seeking tenants, applying for exemptions, appealing rateable values, and staying informed about legislative changes, property owners can better navigate the complex world of business rates on empty commercial property.